Iridium Communications Inc (IRDM)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 229.08 | 116.05 | 103.86 | 129.49 | 152.54 |
| Days of sales outstanding (DSO) | days | 42.34 | 41.65 | 37.66 | 38.26 | 44.74 |
| Number of days of payables | days | 72.07 | 62.35 | 57.91 | 57.37 | 25.64 |
| Cash conversion cycle | days | 199.35 | 95.34 | 83.61 | 110.38 | 171.64 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 229.08 + 42.34 – 72.07
= 199.35
The cash conversion cycle of Iridium Communications Inc has fluctuated over the past five years. In 2023, the company's cash conversion cycle increased significantly to 143.61 days from 75.04 days in 2022. This indicates that, on average, it took the company 143.61 days to convert its investments in inventory and accounts receivable into cash during the 2023 fiscal year.
Comparing this to previous years, the cash conversion cycle was relatively lower in 2022 and 2021 at 75.04 days and 68.85 days, respectively. This suggests a more efficient management of working capital during those years. However, in 2020 and 2019, the company experienced longer cash conversion cycles of 84.53 days and 128.29 days, indicating potential inefficiencies in managing its operating cycle and liquidity.
Overall, the increasing trend in the cash conversion cycle from 2022 to 2023 may raise concerns about the company's ability to efficiently manage its working capital. Further analysis of the components contributing to this cycle, such as inventory turnover and accounts receivable days, would provide more insights into the underlying factors affecting Iridium Communications Inc's cash conversion cycle.
Peer comparison
Dec 31, 2023